The Central Bank of Sri Lanka on Friday published a notice alerting about the risks of cryptocurrency. The trading and interest volumes of cryptocurrencies and bitcoin are surging globally and locally. And that is why it has become more important to regulate the warning notice.
CBSL, on their notice, answered the latest inquiries on virtual currency usage in the domestic and international markets.
They said that they felt like informing the common public about the risks linked with investing in virtual currencies.
The Central bank also gave a more in-depth analysis on various types of cryptocurrencies, among which the virtual currencies like litecoin, bitcoin, and Ethereum are the most renowned ones. They further said that there are no such regulatory safeguards available for dealing, investing, or using VCs in Sri Lanka. Thus, it could be risky for people residing in Sri Lanka to get involved in VCs.
The Central bank also said that investors/ users wouldn’t have any specific legal or regulatory recourse for any dispute.
Also, cryptocurrencies are majorly volatile as they are “dependent on speculation.” Thus, investors remain at the risk of undergoing huge losses. The bank even mentions the possible linkage of such VCs with financing terrorist activities or criminal proceeds.
The bank didn’t miss out on the effective “Violation of Foreign Exchange Regulations” as well. It explained that because cryptocurrencies traded as assets in exchanges, collecting/ purchasing them from foreign countries will be considered a violation of this regulation. It is so because the Foreign Exchange Act No. 12 of 2017 says that cryptocurrencies don’t come under the permitted investment category.
In addition to that, EFTCs (Electronic Fund Transfer Cards) like credit and debit cards are also not allowed to be utilized for making transactions in foreign currency for purchasing virtual currencies. This situation also falls under the non-permitted category. Thus, the public cannot use these cards for and such foreign currency transactions in Sri Lanka.
The past record says it is not the first time that the Sri Lankan Central Bank issued such warnings related to cryptocurrencies. It previously also had launched a crypto alert notice back in April 2018.
The Central bank of Sri Lanka also said that they have “not given any license or authorization to any entity or company to operate schemes involving VCs, including cryptocurrencies, and has not authorized any ICOs, mining operations or virtual currency exchanges.”